WESM-ECM 1.0 23oct2021

PUBLIC
WESM Manual
Enforcement and Compliance

Issue 1.0 | WESM-ECM
This manual sets out the approach for enforcement of the obligations of WESM Members
under the WESM Rules, the Retail Rules and its Market Manuals, and implements Section
7.2 of the WESM Rules and related provisions. It sets out specifically the guidelines and
procedures for monitoring compliance by WESM Members with their obligations under the
WESM Rules, the Retail Rules and its Market Manuals, and in the investigation and
imposition of sanctions for breach. It also includes the corresponding authorities and
responsibilities of the persons and entities involved in the enforcement processes of the
WESM. This also sets out the obligations of WESM Compliance Officers designated
pursuant to the WESM Rules.
Approval Date: 30-Jun-2021 | Publication Date: 22-Oct-2021

PEMC Website Posting Date: 16-Dec-2021 | Effective Date: 23-Oct-2021
In case of inconsistency between this document and the DOE Circulars, the latter shall prevail.
Document Change History
Issue
Proponent Date of Effectivity Reason for Amendment
No.
1.0 PEMC 23-Oct-2021 New Market Manual
Document Approval
RCC PEM Board
Issue RCC PEM Board DOE DOE DC
Resolution Resolution
No. Approval Approval Approval No.
No. No.
16-Jul- DC2021-
1.0 2021-08 25-Aug-2021 2021-39-07 30-Jul-2021
2021 08-0026
Reference Documents
Document ID Document Title
Wholesale Electricity Spot Market Rules (WESM Rules)
Retail Rules for the Integration of Retail Competition and Open
Access in the Wholesale Electricity Spot Market (Retail Rules)
WESM-PM WESM Penalty Manual
Enforcement and Compliance Manual i

Contents
SECTION 1 INTRODUCTION ........................................................................................... 1
1.1 Purpose ..................................................................................................................... 1
1.2 Scope of Application .................................................................................................. 1
SECTION 2 DEFINITIONS, REFERENCES AND INTERPRETATION .............................. 2
2.1 Definitions ................................................................................................................. 2
2.2 References ................................................................................................................ 2
2.3 Interpretation ............................................................................................................. 2
SECTION 3 LEGAL AND REGULATORY FRAMEWORK ................................................. 3
3.1 Legal Basis ................................................................................................................ 3
3.2 Enforcement of the Market Rules .............................................................................. 4
3.3 Scope of Market Enforcement and Sanctions ............................................................ 4
3.4 Enforcement Actions under the WESM Rules............................................................ 4
SECTION 4 RESPONSIBILITIES ...................................................................................... 6
4.1 Philippine Electricity Market Board ............................................................................ 6
4.2 Compliance Committee ............................................................................................. 6
4.3 Enforcement and Compliance Office ......................................................................... 7
4.4 PEMC President ........................................................................................................ 9
4.5 Market Assessment Group ........................................................................................ 9
4.6 WESM Governance Committees ............................................................................... 9
4.7 Market Operator ........................................................................................................ 9
4.8 System Operator ..................................................................................................... 10
4.9 WESM Members ..................................................................................................... 10
Enforcement and Compliance Manual ii

SECTION 5 WESM ENFORCEMENT PROCEEDINGS AND ACTIONS ......................... 11
5.1 Definition of Breach ................................................................................................. 11
5.2 Enforcement Proceedings ....................................................................................... 11
5.3 Enforcement Actions for Breach .............................................................................. 13
SECTION 6 PROCEDURES FOR COMPLIANCE MONITORING AND ASSESSMENT . 14
6.1 Guiding Principles ................................................................................................... 14
6.2 Flagging of Probable Breach ................................................................................... 14
6.3 Submission of Reply and Supporting Documents .................................................... 15
6.4 Validation and Assessment ..................................................................................... 15
6.5 Issuance of Report .................................................................................................. 16
6.6 Reconsideration and/or Appeal................................................................................ 16
6.7 Issuance of Notice of Specified Penalty ................................................................... 16
SECTION 7 PROCEDURES FOR INVESTIGATION AND REVIEW................................ 17
7.2 Initiation of Investigation .......................................................................................... 18
7.3 Notice of Investigation ............................................................................................. 20
7.4 Submission by Parties ............................................................................................. 21
7.5 Conferences and Ocular Inspections ....................................................................... 22
7.6 Request for Information and Technical Advice......................................................... 22
7.7 Completion of Formal Investigation ......................................................................... 23
7.8 Review of Investigation ............................................................................................ 23
7.9 Decision .................................................................................................................. 24
7.10 Remand of Cases .................................................................................................... 24
7.11 Request for Reconsideration of the PEM Board Decision ........................................ 24
7.12 Notice and Implementation of the PEM Board Decision ........................................... 25
Enforcement and Compliance Manual iii

7.13 Investigation of the Market Operator and the System Operator ............................... 25
7.14 Remedial Measures................................................................................................. 27
7.15 Costs ....................................................................................................................... 29
7.16 Service of Notices and Reports ............................................................................... 29
SECTION 8 NON-COMPLIANCE REPORT .................................................................... 31
8.1 Rationale ................................................................................................................. 31
8.2 Scope of Application ................................................................................................ 31
8.3 Non-Compliance Reports ........................................................................................ 31
8.4 Contents of Non-Compliance Reports ..................................................................... 32
8.5 Submission of Non-Compliance Reports ................................................................. 32
8.6 Action on Non-Compliance Reports......................................................................... 33
SECTION 9 WESM MEMBER INTERNAL COMPLIANCE .............................................. 34
9.2 WESM Member Internal Compliance ....................................................................... 34
9.3 WESM Compliance Officers .................................................................................... 34
9.4 Obligations of WESM Compliance Officers .............................................................. 35
9.5 Annual WCO Report ................................................................................................ 36
SECTION 10 INFORMATION DISCLOSURE AND RECORDS MANAGEMENT............... 37
10.1 Scope of Application ................................................................................................ 37
10.2 Information Disclosure and Publication .................................................................... 37
10.3 Reporting Requirements .......................................................................................... 37
10.4 Compliance Database and Records Retention ........................................................ 38
Enforcement and Compliance Manual iv

SECTION 11 LIMITATION OF LIABILITY AND INDEMNIFICATION ................................. 40
11.1 Limitation of Liability ................................................................................................ 40
11.2 Indemnification ........................................................................................................ 40
SECTION 12 AMENDMENT, PUBLICATION AND EFFECTIVITY .................................... 41
12.1 Amendments ........................................................................................................... 41
12.2 Publication and Effectivity ........................................................................................ 41
SECTION 13 GLOSSARY ................................................................................................. 42
APPENDIX I ........................................................................................................................ 44
Enforcement and Compliance Manual v

SECTION 1 INTRODUCTION
1.1 PURPOSE
1.1.1 This Manual sets out the framework and processes by which compliance with the
Wholesale Electricity Spot Market (WESM) Rules, Retail Rules and Market
Manuals governing the market are enforced. It sets out more particularly the
processes for monitoring compliance, and for investigation of breaches and
imposition of corresponding sanctions and penalties, and other consequences of
breach.
1.2 SCOPE OF APPLICATION
1.2.1 More specifically, the processes and actions set out in this Manual apply to the
enforcement of the following Market Rules –
a) the Wholesale Electricity Spot Market Rules, otherwise known as the WESM
Rules, and its associated Market Manuals; and
b) the Retail Rules for the Integration of Retail Competition and Open Access in
the Wholesale Electricity Spot Market, otherwise known as the Retail Rules,
and its associated Market Manuals.
For this purpose, they shall be collectively referred to as Market Rules in this
Manual.
1.2.2 The processes set out in this Manual apply to all WESM Members, including
Trading Participants, the System Operator, Market Operator, as well as, the
service providers.
1.2.3 The investigation procedures set out in this Manual will also apply in cases where
the Enforcement and Compliance Office is directed by the PEM Board,
Department of Energy (DOE) or the Energy Regulatory Commission (ERC) to
conduct investigations for subject matters and purposes involving WESM
Members and their participation in the WESM, other than what is covered by this
Manual and for which no procedures were prescribed.
Enforcement and Compliance Manual Page 1 of 48

SECTION 2 DEFINITIONS, REFERENCES AND
INTERPRETATION
2.1 DEFINITIONS
2.1.1 All terms and abbreviations used in this Manual that are defined in the Market
Rules shall have the same meaning as defined in the latter, unless the context
otherwise provides or the said term or abbreviation is otherwise defined in the
Glossary of this Manual. This shall be regardless of whether or not the term or
abbreviation is italicized.
2.1.2 Where italicized and unless the context otherwise provides, the term or
abbreviation shall have the definition given in the Glossary of this Manual.
2.2 REFERENCES
2.2.1 This Manual shall be read in conjunction with the Market Rules, including but not
limited to the documents listed in the Reference Documents table of this Manual.
2.3 INTERPRETATION
2.3.1 Unless otherwise stated in this Manual, the rules of interpretation set out in
Chapter 9 of the WESM Rules shall also apply to this Manual.

SECTION 3 LEGAL AND REGULATORY FRAMEWORK
3.1 LEGAL BASIS
3.1.1 Section 30 of Republic Act No. 9136 expressly provides that the WESM Rules
shall specify the procedures for, among other things, the surveillance and
assurance of compliance of the participants with the Market Rules. The formation
of the market’s governing body is likewise mandated to be included in the Market
Rules as part of the procedures for administering the market.
3.1.2 These mandates are reiterated in the EPIRA Implementing Rules and
Regulations, or the EPIRA-IRR. The EPIRA-IRR, Rule 9 similarly directs the
inclusion in the WESM Rules of the procedures for assurance of compliance with
the rules among market participants and the formation of a governing body. 1 The
same Rule 9 likewise states that the Market Rules shall be formulated as to
provide for adequate sanctions in cases of breaches of the WESM Rules. 2
3.1.3 Pursuant to the legal mandate discussed above, the WESM Rules provide for
the manner by which they are to be enforced, including particularly the imposition
of sanctions for breach and the requirements and procedures before sanctions
can be imposed. 3 The WESM Rules likewise provide for the design and
promulgation of a penalty scheme that will be applied in case of breach. 4
3.1.4 The WESM Rules also expressly provide that WESM Members, upon having
registered with the Market Operator as such, are bound by the WESM Rules. 5
3.1.5 Meanwhile, the Retail Rules expressly provide that Chapter 1 of the WESM Rules
shall apply with respect to the governance of the integration of retail competition
in the WESM, the operations of the Central Registration Body and the
participation and transactions in the WESM of Suppliers and Contestable
Customers. 6 It is also expressly provided that the enforcement of the Retail Rules
shall also be in accordance with Chapter 7 of the WESM Rules. 7
1 EPIRA-IRR, Rule 9, Section 5 (c) (iii)

2 EPIRA-IRR, Rule 9, Section 5 (b) (iv)
3 WESM Rules, Clause 1.8.1 and Section 7.2
4 WESM Rules, Clause 1.6.3
5 WESM Rules, Clause 2.2.2
6 Retail Rules, Clause 1.5.1
7 Retail Rules, Clause 1.7

3.2 ENFORCEMENT OF THE MARKET RULES
3.2.1 The WESM Rules establish a governance structure for the WESM which
includes, among other things, a structure for carrying out enforcement and
compliance functions. The establishment of such governance structure is
pursuant to the EPIRA which, provides that the procedures for administering the
market which are to be set out in the WESM Rules include the formation of a
governing body.8
3.2.2 In line with this, the WESM Rules prescribe the respective mandates of the
Philippine Electricity Market Board and the Compliance Committee in respect to
enforcement and compliance. The WESM Rules also provide for the creation of
an Enforcement and Compliance Office to assist the Board in carrying out its
enforcement and compliance functions. The Enforcement and Compliance Office
is a unit within the Philippine Electricity Market Corporation (PEMC).
3.3 SCOPE OF MARKET ENFORCEMENT AND SANCTIONS
3.3.1 The sanctions that may be imposed by authority of and the enforcement process
prescribed in the WESM Rules are for breaches of the Market Rules. The specific
approach to enforcement is described in more detail in Section 5 of this Manual.
3.4 ENFORCEMENT ACTIONS UNDER THE WESM RULES
3.4.1 WESM Rules Clause 1.8.1 provides that the Rules are to be enforceable in
accordance with its Chapter 7.
3.4.2 In addition, however, the Market Rules also authorize the Market Operator to
impose sanctions and penalties for some specific non-compliance or behavior.
These specifically pertain to non-compliances with registration and membership
requirements by WESM Members: defaults in payments and prudential
requirements by Trading Participants, and to breaches and unethical acts by
Metering Services Providers. More specifically –
a) Non-compliances with the WESM registration requirements give ground for

the Market Operator to take punitive action, and the sanctions that can be
imposed include suspension or deregistration of the WESM Member from the
WESM. 8
b) Non-compliances pertaining to prudential requirements 9 and to payments to

the Market Operator are considered as events of default 10 and similarly give
grounds for the Market Operator to suspend or deregister the erring WESM
Member from the WESM.
8 WESM Manual on Registration, Suspension and De-registration Criteria and Procedures

9 WESM Rules Section 3.15.5, 3.15.6 and 3.15.10 in relation to Section 3.15
10 WESM Rules Section 3.14.11

c) Breach and unethical act or conduct by a Metering Services Provider also
gives ground for deregistration of the erring Metering Service Provider by the
Market Operator. 11 The Market Operator is also authorized under the WESM
Rules to develop a process of penalties and sanctions for Meter Services
Provider whose meter data is incorrect beyond reasonable limits. 12
11 WESM Rules Clauses 4.7.2 and 4.7.5

12 WESM Rules Clauses 4.7.3, 4.7.4 and 4.7.5 and Retail Rules 4.1.3

SECTION 4 RESPONSIBILITIES
4.1 PHILIPPINE ELECTRICITY MARKET BOARD
4.1.1 Within the Market, the PEM Board shall have the primary authority and
responsibility to enforce the Market Rules. In this respect, the PEM Board shall
be responsible for deciding outcomes of investigations that are brought to it,
particularly, authorizing the imposition of sanctions for breach, unless otherwise
delegated, and directing the implementation of any remedial or mitigation
measures, pursuant to the procedures set out in this Manual.
4.1.2 The PEM Board shall exercise its authority to enforce the rules in the manner set
out in the Market Rules, and in the WESM Penalty Manual. It shall carry out this
function in conjunction with the Compliance Committee, and the Enforcement
and Compliance Office, which are by themselves granted specific authorities
under the Market Rules, and the WESM Penalty Manual. As such, the PEM
Board shall not exercise its authority in a manner as to limit the corresponding
authority granted to the Compliance Committee, and the Enforcement and
Compliance Office.
4.1.3 The PEM Board shall meet, deliberate, resolve and vote on the investigations for
breach, particularly imposition of penalties, sanctions, and remedial measures
based on the recommendations of the Compliance Committee and results of the
investigations by the Enforcement and Compliance Office, and all matters
pertaining to enforcement and compliance, in the same manner as it meets,
deliberates, resolves and votes on matters submitted to or coming within its
authority, unless such act of imposing penalties, sanctions and remedial
measures is authorized to be carried out by the Compliance Committee or the
Enforcement and Compliance Office under the WESM Penalty Manual or other
relevant Market Manuals. It may, at its discretion, adopt its own internal
procedures for handling of investigations and other enforcement- related matters
referred to it.
4.2 COMPLIANCE COMMITTEE
4.2.1 Within the limits set out in this Manual and in addition to its functions as set out
in the Market Rules and the Compliance Committee Manual, the Compliance
Committee has the following authority and obligation in respect to enforcement
of the Market Rules. Its enforcement authority includes the authority to:
a) Review reports of investigations of breaches to the WESM Rules and Market

Manuals carried out by the Enforcement and Compliance Office and, based
on the results of such investigation, decide on the outcomes of the
investigation and recommend imposition of sanctions or penalties if
warranted;

b) Review and monitor the compliance of the Enforcement and Compliance
Office with the reportorial requirements pursuant to the WESM Rules, Market
Manuals, and other applicable laws, rules, regulations, or issuances;
c) Review and monitor the compliance by the Market Operator and the System
Operator with their obligations pursuant to the WESM Rules and Market
Manuals, or any coordinating or operating agreements, or protocols which
may be established governing the performance of their functions and
obligations under the WESM Rules and Market Manuals.
d) Propose amendments to the WESM Rules or Market Manuals in accordance
with chapter 8 with a view to:
(i) Improving the efficiency and the effectiveness of the operation of the
WESM; and
(ii) Improving or enhancing the prospects for the achievement of the WESM
objectives;
e) Assist the Rules Change Committee in relation to its assessment of proposals
to amend the WESM Rules or Market Manuals under Chapter 8; and
f) Recommend to the PEM Board the imposition of penalties for breaches other
than those arising from and determined through the compliance monitoring
and assessment by Enforcement and Compliance Office, and
implementation of remedial measures as a consequence of such breach,
based on outcomes of investigation carried out by the Enforcement and
Compliance Office.
4.3 ENFORCEMENT AND COMPLIANCE OFFICE
4.3.1 The Enforcement and Compliance Office shall assist the PEM Board in the
enforcement of the Market Rules, and shall have the following authority and
responsibility –
a) Administer the WESM enforcement processes, with authority and

responsibility that includes, but is not limited to –
i. monitoring of compliance amongst WESM Members, and, based on the

result of its own monitoring and assessment, imposing specified
penalties therefor in accordance with the Market Rules and the WESM
Penalty Manual;
ii. deciding on a request for reconsideration filed by any WESM Member
of the findings or results of the compliance monitoring and assessment
activities as may be authorized under the Market Rules and the WESM
Penalty Manual;
iii. investigating breach, submitting the results of its investigations and
making recommendations on sanctions and penalties, and remedial
measures, as it deems appropriate based on the results of its
investigations; and
iv. evaluating applications for exemptions and submitting
recommendations on possible action on the application, and monitoring
implementation of approved compliance plans.

b) Require from WESM Members, the Market Operator, and the System
Operator the submission of data, documents, and other forms of information
that it needs in the course of its monitoring and investigation;
c) Obtain data, documents, and other forms of information that it needs for its
monitoring and investigations from persons, agencies, or entities other than
those stated in the foregoing paragraph;
d) Obtain expert advice or technical assistance, and other information from
WESM Governance Committees, as it deems necessary, to aid in its
investigation and monitoring;
e) Prepare and issue notices, memoranda, and reports in respect of its own
functions and authority; and
f) Assist the PEM Board in enforcing approved penalties and sanctions, as well
as in implementing remedial measures.
4.3.2 The Enforcement and Compliance Office shall exercise the foregoing authority
and functions under the supervision and control of the PEM Board. Neither the
Compliance Committee nor the Board shall, however, act in such a manner as to
prevent, unreasonably delay, or exert undue influence over, the performance by
the Enforcement and Compliance Office of its functions.
4.3.3 In addition to the foregoing functions, the Enforcement and Compliance Office
shall also be responsible for:
a) Continuously developing systems and procedures to deter breaches of the

Market Rules and further evolve enforcement of penalties consistent with
the objectives of the WESM;
b) Implementing compliance activities intended to promote consultation and
voluntary compliance, to deter breaches of the Market Rules by WESM
Members and to further evolve enforcement of penalties consistent with the
objectives of the WESM;
c) Assisting the Market Surveillance Committee in designing penalty levels and
in reviewing and recommending changes, as appropriate, to the WESM
Penalty Manual;
d) Serving as primary support unit of the Compliance Committee;
e) Keeping the PEM Board informed on compliance-related matters;
f) Notifying the ERC and the DOE of investigations on and confirmed breaches
by WESM Members;
g) Undertaking other compliance-related activities directed by the PEM Board;
h) Receiving and managing all compliance-related communications such as
reports, notices, self-reports, requests for investigations, reports of probable
breach and complaints;
i) Maintaining a compliance database in accordance with this Manual,
publishing information in the market information website, and disseminating
information to various parties;
j) Performing all other actions required of it under this Manual; and

k) Overall, providing secretariat and technical support to the PEM Board in
matters pertaining to investigations, and other enforcement and compliance
matters.
4.4 PEMC PRESIDENT
4.4.1 The PEMC President shall have the following functions in respect to enforcement
and compliance in the market –
a) Appoint the Enforcement and Compliance Office staff;

b) Exercise administrative supervision over the Enforcement and Compliance
Office and its performance of the duties and responsibilities under this
Manual; and
c) Issue notices and receive notices or authorize receiving of notices required
in this Manual to be issued by or to the Market Operator in accordance with
internal business processes of PEMC.
4.5 MARKET ASSESSMENT GROUP
4.5.1 The Market Assessment Group shall –
a) Make available to the Enforcement and Compliance Office, the Compliance

Committee, and the PEM Board its market assessment and monitoring
reports and data as well as other market and dispatch data and reports
received by it in the course of performing its market monitoring functions;
and
b) Provide technical assistance or expertise, if so requested, in relation to any
investigation or enforcement action being undertaken.
4.6 WESM GOVERNANCE COMMITTEES
4.6.1 Any of the WESM Governance Committees or any of their members shall, if
called upon or requested -
a) Provide technical expertise or assistance in relation to any investigation or

enforcement action being undertaken; and
b) Provide or make available its reports, data or information that can aid in any
investigation or compliance monitoring being undertaken.
4.6.2 If, in the course of the performance of its functions, a WESM Governance
Committee or any of its members has reason to believe that a WESM Member
may have committed a breach, it may submit a request for investigation in
accordance with the procedures set out in this Manual.
4.7 MARKET OPERATOR
4.7.1 The Market Operator shall –

Committee and the PEM Board data, reports and other information received
or generated by it or that comes into its custody in the course of its market
operations;
investigation or enforcement action being undertaken;
c) Perform such other functions as may be required of it under this Manual.
4.7.2 If, in the course of the performance of its functions, the Market Operator has
reason to believe that a WESM Member may have committed a breach, it may
initiate an investigation by submitting a notice of probable breach in accordance
with the procedures set out in this Manual.
4.8 SYSTEM OPERATOR
4.8.1 The System Operator shall, if called upon or requested –

Committee and the PEM Board data, reports and other information received
or generated by it or that comes into its custody in the course of its
operations;
investigation or enforcement action being undertaken; and
c) Perform the actions required of it under this Manual.
4.8.2 If, in the course of the performance of its functions, the System Operator has
reason to believe that a WESM Member may have committed a breach, it may
initiate an investigation by submitting a notice of probable breach in accordance
with the procedures set out in this Manual.
4.9 WESM MEMBERS
4.9.1 By having registered in the WESM, a WESM Member has undertaken to comply,
in good faith, with the Market Rules and as such, is bound by this Manual and
the WESM Penalty Manual, and all notices and decisions issued by authority of
these manuals.
4.9.2 If called upon or requested, a WESM Member shall strictly comply with directives
and notices issued in relation to any enforcement action and enforcement
proceeding being carried out.
4.9.3 Any WESM Member may initiate an investigation by submitting a request for
investigation in accordance with the procedures set out in this Manual if it has
reason to believe that another WESM Member may have committed a breach.

SECTION 5 WESM ENFORCEMENT PROCEEDINGS AND
ACTIONS
5.1 DEFINITION OF BREACH
5.1.1 A non-compliance with the Market Rules is categorized as a breach if it is of such

nature that its occurrence can cause adverse impact on or threaten the efficiency
of the scheduling and dispatch processes of the WESM and the ability of the
WESM to meet its objectives. In these cases, ensuring the efficiency of the
WESM and prevention of any adverse impact to either the market or the power
system is more important.
5.1.2 More specifically, the non-compliances that are categorized as breaches covered
by enforcement under this Manual are as follows –
a) Non-compliances with the Market Rules which are specified as breach in

and are subject of sanctions under the WESM Penalty Manual; 13 and
b) Non-compliances with provisions of the Market Rules which are expressly

provided as subject to sanctions under said provisions of the Market Rules
although they may not be specifically listed in the WESM Penalty Manual.
5.1.3 Any enforcement action taken under this Manual does not imply enforcement of
the Philippine Grid Code, the Philippine Distribution Code, other rules and
regulations which likewise govern or regulate the WESM or the WESM Members,
and therefore does not prejudice and is likewise not prejudiced by the taking of
any action authorized under such codes, rules and regulations. This is
notwithstanding that such codes, rules and regulations also impose sanctions on
the same acts or omissions that constitute a breach of the Market Rules or Market
Manuals as defined above.
5.2 ENFORCEMENT PROCEEDINGS
5.2.1 WESM enforcement proceedings refer to the activities or processes that are
carried out to establish and determine the occurrence of breach and the
corresponding enforcement action that will be carried out as a consequence of
the breach. These include the processes for compliance monitoring and
assessment, investigation for breach and imposition of enforcement actions. The
timeline and the entities responsible and/or accountable for the enforcement
proceedings are summarized in Appendices I and II of this Manual.
5.2.2 Compliance monitoring and assessment, as described in this Manual, is an

integral part of enforcement proceedings in the WESM. Compliance monitoring
under this Manual shall be carried out by the Enforcement and Compliance Office
and shall be primarily for the purpose of determining the occurrence of breach of
13 See WESM Penalty Manual.

the Market Rules. Assessment is done by taking into consideration all the
relevant and verified market data and information from the Market Operator, the
System Operator, the WESM Members, among others, with the end in view of
determining the appropriate enforcement actions, if warranted. The compliance
monitoring and assessment carried out for other purposes, such as for measuring
performance standards or for audit compliance or for market assessment and
surveillance, is not covered or restricted by this Manual.
5.2.3 Investigations for breach committed by WESM Members may be initiated by

the Enforcement and Compliance Office, from a notice of probable breach by the
Market Operator or the System Operator, or by request for investigation from
other WESM Members or WESM Governance Committees. Investigation may
also be initiated from the directive of the PEM Board, DOE or ERC. This is carried
out by the Enforcement and Compliance Office which shall afford the party being
investigated sufficient opportunities to respond to the investigation. Investigation
reports of the Enforcement and Compliance Office are reviewed by the
Compliance Committee. The results of the investigation, as reviewed, are then
submitted to the PEM Board, which has the authority to impose sanctions and
penalties, and to require that remedial measures be carried out.
5.2.4 Investigation of the Market Operator and the System Operator. The
investigation of the Market Operator and the System Operator by the
Enforcement and Compliance Office shall be in accordance with the relevant
provisions of the Enforcement and Compliance Manual. The PEM Board, as it
may deem necessary, may thereafter file a formal complaint with the ERC and
the DOE.
5.2.5 Imposition of specified penalties by the Enforcement and Compliance Office,

as may be authorized by the Market Rules and the WESM Penalty Manual, is
carried out if a breach is determined after the concerned WESM Member is
afforded adequate opportunities to respond to the initial finding of probable
breach. This is imposed upon finding of breach as a result of compliance
monitoring and assessment, as initiated by the Enforcement and Compliance
Office.
5.2.6 Imposition of sanctions and penalties by the PEM Board is carried out in the
accordance with the WESM Penalty Manual and is based on the
recommendations of the Compliance Committee. The latter submits
recommendations based on its findings of facts on an investigation which, in turn,
is based on its review of the results of the investigations by the Enforcement and
Compliance Office. The investigations referred to herein are those initiated in
accordance with Section 7.3.1 of this Manual.
5.2.7 Imposition of Penalties on the Market Operator and the System Operator.
The penalty for breach of the Market Rules by the Market Operator or the System
Operator shall be determined and imposed by the Energy Regulatory

Commission based on the results of the investigation by the Enforcement and
Compliance Office and the formal complaint of the PEM Board.
5.2.8 Implementation of remedial measures can be prescribed by the Enforcement

and Compliance Office or the Compliance Committee as provisional measures
while an investigation for breach is ongoing. Final remedial measures are
determined and imposed by the PEM Board based on the outcomes of an
investigation.
5.3 ENFORCEMENT ACTIONS FOR BREACH
5.3.1 Enforcement actions are the actions that can be authorized to be done as
consequences of a breach. These include the imposition of sanctions and
penalties or requiring implementation of remedial measures. In appropriate
cases, filing of a complaint or petition to initiate regulatory action may also be
authorized.
5.3.2 Financial and non-financial penalties. The financial and non-financial

penalties that can be imposed for breaches covered by this Manual are those set
out in the WESM Penalty Manual.
5.3.3 Remedial measures. To ensure continuing compliance, to prevent recurrence

of breach, or to prevent or mitigate adverse impact on the market or the power
system, it may be necessary to require a WESM Member to take remedial
measures. Such measures may be required to be implemented before, during
and after an investigation. The remedial measures that can be imposed shall be
determined on a case by case basis, and may be directed by either the
Enforcement and Compliance Office, the Compliance Committee or the PEM
Board, depending on which stage of the process the measure is required to be
carried out.
5.3.4 Initiation of regulatory action. In cases of breach by the System Operator or

the Market Operator, the PEM Board may initiate a complaint with the ERC and
DOE if either party fails to rectify the breach or the breach is incapable of
rectification.

SECTION 6 PROCEDURES FOR COMPLIANCE MONITORING
AND ASSESSMENT
6.1 GUIDING PRINCIPLES
6.1.1 The Enforcement and Compliance Office shall regularly monitor compliance by
WESM Members with the Market Rules to determine if an act or omission that
may constitute probable breach covered by this Manual may have been
committed. The monitoring shall cover all WESM Members and all categories of
breach described in Section 5.1 as covered by the enforcement process set out
in this Manual.
6.1.2 The Enforcement and Compliance Office shall carry out compliance monitoring
and assessment by examining readily available and verifiable market and
dispatch data and reports and such other information it can obtain from the DOE
and the ERC and their attached agencies or offices, and other government
agencies with jurisdiction over the WESM Member or its operations.
6.1.3 The Enforcement and Compliance Office shall, for this purpose, establish a
detailed process or procedure of compliance monitoring and assessment and
prescribe a reply format or template that may be accomplished by the WESM
Member as part of the monitoring process. In developing the procedure, the
Enforcement and Compliance Office shall ensure that the right of the WESM
Member to due process shall be protected by giving them adequate time and
opportunity to respond to any allegations of probable breach of the Market Rules,
and to be informed of the results of the compliance monitoring and assessment.
6.1.4 If, as a result of its compliance monitoring and assessment, and after taking into
account all the market data and information cited in Section 6.4.1, the reasons
provided by the concerned WESM Member and all the supporting documents
submitted in relation thereto under Section 6.3.2, the Enforcement and
Compliance Office determines that there is a breach committed by a WESM
Member, and shall issue the Notice of Specified Penalty through the PEMC
President in accordance with the WESM Penalty Manual. Where remedial
measures are required, it shall cause the implementation of the same in
accordance with Section 7.1.5.
6.1.5 A WESM Member may seek a reconsideration or appeal of the findings contained
in the compliance monitoring and assessment report in accordance with the
procedures and subject to the requirements provided in the WESM Penalty
Manual.
6.2 FLAGGING OF PROBABLE BREACH
6.2.1 The Enforcement and Compliance Office shall conduct the daily initial
compliance monitoring of the breach of the Market Rules. The notice of non-
compliance will be sent to the concerned WESM Members through their

respective WESM Compliance Officers on a daily basis or in such frequency as
may hereafter be set by the WESM Rules or other Market Manuals.
6.2.2 The flagging or the notification of the probable breach can be implemented or
satisfied through a system that automatically checks for non-conformance.
6.3 SUBMISSION OF REPLY AND SUPPORTING DOCUMENTS
6.3.1 The WESM Member shall have three (3) business days from receipt of the non-
compliance notice or flagging of probable breach to respond thereto.
6.3.2 The explanations of the WESM Member shall be accompanied by supporting

documents. If the information indicated in the reply is/are incomplete or not
supported by appropriate and relevant supporting documents, the Enforcement
and Compliance Office shall immediately coordinate with the contact person or
authorized representatives of the concerned trading participants to address the
lack of information or supporting documents.
6.3.3 If the WESM Member fails or refuses to submit or provide to the Enforcement
and Compliance Office any information in its possession or known to it during the
compliance monitoring, the Enforcement and Compliance Office shall proceed
with the assessment of compliances as set forth in the succeeding section based
solely on the available data or information.
6.4 VALIDATION AND ASSESSMENT
6.4.1 The Enforcement and Compliance Office shall, on a daily basis, conduct
validation, verification, and assessment of the compliances by the WESM
Member by taking into account the submissions of the WESM Members, the data
and information provided by or obtained from the Market Operator, the System
Operator, and other agencies or entities, as may be applicable.
6.4.2 The Enforcement and Compliance Office may, from time to time, require the
WESM Member to submit additional documents or information to clarify the
reasons or explanations provided by the latter.
6.4.3 The Enforcement and Compliance Office shall complete its validation and
assessment of a specific billing or monitoring period by the 15th of the month
following the month subject of the monitoring unless a different period of
monitoring and assessment is hereafter set by the Market Manuals or due to
unforeseen events or incidents which are beyond the control of the Enforcement
and Compliance Office.
6.4.4 The Enforcement and Compliance Office shall maintain a compliance database
that contain all the files and documents used in relation to its monitoring and
assessment activity.

6.5 ISSUANCE OF REPORT
6.5.1 The Enforcement and Compliance Office shall, based on the available market
data at the time of the assessment, prepare the compliance monitoring and
assessment report which shall:
a) contain or provide, among others, a finding whether the concerned WESM

Member is compliant with the Market Rules;
b) contain or provide the penalty amounts, if any, as a result of the finding of
breach;
c) cover one billing month unless a different period or duration is set by other
Market Manuals;
d) be issued to the concerned WESM Member with respect to each facility or
plant that is subject of monitoring, as applicable; and
e) be issued not later than the 15th day of the month following the month subject
of the monitoring. For instance, the monitoring covers the September billing
month, the report shall be issued not later than 15 October.
6.5.2 If there is a finding of breach by the Enforcement and Compliance Office based
on its validation and assessment, the report shall likewise be accompanied by a
Notice of Specified Penalty. The service of Notice of the Specified Penalty and
the effect thereof, including the collection of penalties, are provided in the WESM
Penalty Manual.
6.6 RECONSIDERATION AND/OR APPEAL
6.6.1 The filing of Request for Reconsideration or Appeal, the grounds, formal
requirements, and resolution or decision thereon are set forth in the WESM
Penalty Manual.
6.7 ISSUANCE OF NOTICE OF SPECIFIED PENALTY
6.7.1 The Notice of Penalty shall be issued by the Enforcement and Compliance Office
through PEMC President in accordance with the WESM Penalty Manual.

SECTION 7 PROCEDURES FOR INVESTIGATION AND REVIEW
7.1.1 Investigations under this Manual refer to investigations which emanate from the
request for investigations or notice of probable breach filed by the Market
Operator, the System Operator, or other WESM Members. These do not include
any monitoring activities initiated by the Enforcement and Compliance itself
which are already being dealt with under the preceding Section of this Manual.
7.1.2 Notwithstanding the provision of Sections 5.2.3 and 7.1.1, the Enforcement and
Compliance Office may, motu proprio, initiate investigation if it has reasonable
grounds to believe that a particular act or omission by any WESM Member,
Market Operator, or System Operator constitutes a probable breach of the Market
Rules, and which is not otherwise included or covered by the compliance
monitoring activities referred to in Chapter 6 of this Manual.
7.1.3 The investigations under this Manual are inquisitorial and the proceedings are
summary in nature and are not carried out in an adversarial manner. For this
purpose, the Enforcement and Compliance Office has the authority to obtain
information and technical or expert advice from various sources, including but
not limited to the Market Operator, System Operator, the various WESM
Governance Committees, and other entities and agencies to aid in its
investigation. This authority notwithstanding, it is the responsibility of the party
being investigated to ensure that all information in its possession are made
available for the investigation. If the party investigated fails to present or provide
to the Enforcement and Compliance Office any information in its possession or
known to it during the formal investigation, such party is deemed to have waived
the presentation of such information and the same may not thereafter serve as
basis for review of the results of the investigation of the Enforcement and
Compliance Office.
7.1.4 An investigation shall be carried out in a manner that ensures that all parties
concerned are given the opportunity to be heard. This requirement shall be
fulfilled by strict compliance with the procedures set out in this Manual.
7.1.5 Sanctions or penalties may be imposed and remedial measures may be

implemented after an investigation or upon finding of a probable breach as a
result of the compliance monitoring and assessment carried out by the
Enforcement and Compliance Office in accordance with this Manual.
7.1.6 No dispute resolution proceeding may be initiated upon the results of an

investigation, including the findings of fact, the determination of whether a breach
has been committed, and the sanctions, penalties and remedial measures
imposed, and any and all actions taken by the Enforcement and Compliance
Office, Compliance Committee, and PEM Board in respect to an investigation.

7.1.7 Investigations shall be initiated within two (2) years from occurrence of the act or
omission constituting the probable breach. For example, investigation of an event
occurring on 01 January 2014 shall be initiated not later than 01 January 2016
which is the end of the two-year period.
7.1.8 Unless the PEM Board authorizes a longer period, the Enforcement and
Compliance Office shall complete an investigation of a case and submit its
investigation report as set out in Section 7.7 not later than twenty-four (24)
months from the issuance of the notice investigation. The PEM Board, at its
discretion and on written request by the Enforcement and Compliance Office,
may allow a longer period for an investigation to be completed if it is satisfied that
the right of the parties investigated to due process will be prejudiced if a longer
period is not allowed. Where a case is remanded pursuant to Section 7.10 and,
for this reason, the Enforcement and Compliance Office is unable to complete
the investigation within the twenty-four-month period, the PEM Board shall, upon
request of the latter, allow a longer period for the investigation to be completed.
7.2 INITIATION OF INVESTIGATION
7.2.1 An investigation is initiated upon the endorsement to the Enforcement and

Compliance Office of a report of probable breach or a request for investigation
on the WESM Member that is subject of the investigation or upon a directive from
the PEM Board, the DOE or ERC. The related procedures on investigation, such
as, issuance of notice of investigation, submission by the parties, conduct of
ocular inspections, and implementation of the decisions, set forth in Sections 7.3
to 7.12 of this Manual shall apply.
7.2.2 A notice of investigation shall be issued upon either one of the following –
a) A report of probable breach submitted by the System Operator or the Market

Operator; or
b) A request for investigation submitted by any WESM Governance Committee
or any WESM Member; or
c) A directive from the PEM Board, DOE or ERC specifically directing
investigation for breach for possible imposition of sanctions under the
WESM Rules or the WESM Penalty Manual; or
d) Initiation of investigation by the Enforcement and Compliance Office in
accordance with Section 7.1.2 of this Manual.
7.2.3 If the Market Operator or the System Operator monitors the occurrence of
probable breach by a WESM Member, it may submit to the Enforcement and
Compliance Office a report of probable breach. This shall be in writing and shall
clearly specify, at the minimum, –
a) the type of breach and the rule or Market Manual alleged to have been
breached;
b) the specific acts or omission constituting the possible breach;

c) the WESM Member involved;
d) the generating unit or customer facility involved; and
e) the periods, specifying if applicable the trading dates and trading intervals,
in which the act or omission occurred.
7.2.4 If a WESM Governance Committee, WESM Member or any party believes that a
breach may have been committed by any WESM Member, it may submit a
request for investigation to the Enforcement and Compliance Office. This shall
be in writing and shall clearly specify, at the minimum –
a) the party submitting the request, with complete contact details;

b) the type of breach and the rule or Market Manual alleged to have been
breached;
c) the specific act or omission constituting the possible breach;
d) the WESM Member involved;
e) the generating unit or customer facility involved; and
f) the periods, including if applicable the trading dates and trading intervals, in
which the act or omission occurred.
7.2.5 A request for investigation or report of probable breach may cover more than one
occurrence of the same type of breach. Where the acts or omission constituting
the probable breach occurs several times over one WESM billing period, the
report of probable breach or request for investigation shall, to the extent
practicable, cover all occurrences for at least one billing period. Submission shall
be made within such period as to allow the Enforcement and Compliance Office
reasonable period within which to initiate an investigation within the two-year
period prescribed in Section 7.1.7. In any case, no investigation can be initiated
two (2) years after the occurrence of the act or omission regardless that the
request for investigation or the report for probable breach was submitted before
the lapse of the two-year period.
7.2.6 Immediately upon receipt of the report of probable breach or request for
investigation, the Enforcement and Compliance Office shall determine whether
the specific acts or omissions referred to are already covered in a formal
investigation it has or intends to initiate as a result of its compliance monitoring
under Section 6.2. If so included, it shall notify the party submitting the report of
probable breach or request for investigation that an investigation has been or will
be initiated and that no separate investigation shall thus be initiated.
7.2.7 If the request for investigation or report of probable breach is not covered by a
formal investigation initiated or intended to be initiated, the Enforcement and
Compliance Office shall verify if the same substantially contains the information
required in Section 7.2.4 or 7.2.5. If not, it shall return the same to the requesting
party which shall then rectify the identified shortcomings and submit a new
request for investigation or report of probable breach no later than five (5)
business days from receipt of the notice from the Enforcement and Compliance
Office. If no revision is received within the five-day period, the matter shall be

deemed abandoned and no investigation shall be initiated upon such request or
report.
7.2.8 If the Enforcement and Compliance Office determines that the request for
investigation or report of probable breach is complete, it shall immediately initiate
a formal investigation in accordance with this Manual. The Enforcement and
Compliance Office shall not unreasonably withhold confirmation or delay any
action required in this paragraph.
7.2.9 Where the conduct of an investigation is directed by the PEM Board, DOE or
ERC, the Enforcement and Compliance Office shall initiate formal investigation
in accordance with this Manual no later than ten (10) working days from receipt
of the order, resolution, decision or any such other document containing the
directive, unless a different period is directed.
7.2.10 The directive from the PEM Board, DOE or ERC to conduct an investigation will
be carried out in accordance with this Manual only if the directive clearly specifies
that the investigation is for the purpose of a possible imposition by the PEM Board
of sanctions and penalties pursuant to the WESM Penalty Manual or the WESM
Rules. Where the investigation directed is not for such purpose or is for fact-
finding purposes only, the investigation shall be carried out in accordance with
the directive. In such case, the procedures set out in this Manual shall only have
suppletory effect.
7.2.11 Where the Enforcement and Compliance Office is uncertain as to whether or not
the PEM Board, DOE or ERC directive is clearly for the conduct of an
investigation under this Manual, it shall seek clarification of the same and the
period stated in Section 7.2.8 shall be reckoned from the date that the clarification
has been received by Enforcement and Compliance Office.
7.2.12 If the acts or omissions required to be investigated by the PEM Board, DOE or
ERC are already covered, in whole or in part, by an investigation or by the
compliance monitoring and assessment activity already initiated or intended to
be initiated by the Enforcement and Compliance Office, it may, if appropriate,
consolidate or integrate the data or information used in the compliance
monitoring, or the results thereof, in the investigation so that no overlapping
investigations or monitoring activities shall be carried out, and shall notify the
agency directing the investigation and the parties being investigated of such
consolidation or the results of the previous compliance monitoring and
assessment. If necessary, an amended Preliminary Notice of Investigation shall
be issued.
7.3 NOTICE OF INVESTIGATION
7.3.1 The Preliminary Notice of Investigation shall be issued to and served on the
WESM Member that will be investigated within five (5) business days from receipt
of the endorsement of request for investigation or directive from the PEM Board,

DOE or ERC, as the case may be, and shall clearly state, at the minimum, the
following –
a) type of breach alleged to have been committed and the provision of the
Market Rules alleged to have been breached;
b) acts or omission constituting the possible breach;
c) generation or customer facility or resource involved; and
d) time or trading interval and the trading day when the possible breach
occurred.
7.3.2 If the investigation is initiated upon a report of probable breach, request for
investigation or PEM Board, DOE or ERC directive, but is already covered or is
being covered by the compliance monitoring by the Enforcement and
Compliance Office, the notice of investigation, in addition to the requirement set
in the immediately preceding paragraph, shall also state the market and dispatch
data and report which served as bases for the initiation of the investigation and
upon which a verification of the contents of the notice can be made.
7.3.3 If the investigation is initiated upon a report of probable breach, request for
investigation or PEM Board, DOE or ERC directive, copies of the same shall be
attached to the notice of investigation.
7.3.4 Copies of the notices of investigation shall be furnished to the party that
submitted the request for investigation or report of probable breach, as well as to
the PEM Board, DOE or ERC.
7.4 SUBMISSION BY PARTIES
7.4.1 The WESM Member being investigated shall submit its reply to the investigation
within ten (10) working days from receipt of the notice of investigation.
7.4.2 The reply shall clearly state the party’s explanations and the relevant data,
records and other documents to support the explanations. To ensure
completeness of the reply, the Enforcement and Compliance Office may
prescribe a reply format or template. Copies of all supporting data, records and
other documents duly certified by the custodian of such data, records or
documents shall be submitted with the reply.
7.4.3 The WESM Member being investigated may submit additional or supplemental
reply, data, documents or records to the Enforcement and Compliance Office at
any time before completion of investigation as referred to Section 7.7 of this
Manual.
7.4.4 If the investigation was initiated upon a request for investigation, the party that
submitted the request for investigation may submit additional information to the
Enforcement and Compliance Office, with copies furnished to the WESM

Member being investigated, within ten (10) working days from its receipt of the
copy of the notice of investigation.
7.4.5 The Enforcement and Compliance Office may, at its discretion, request for the
submission of additional explanations, data, records, or other documents from
the party investigated or the party that requested the investigation. The request
shall be issued in writing and shall state the period within which the same should
be submitted which shall not be less than five (5) working days from receipt of
the request. The party so directed shall comply with any request for additional
submission.
7.4.6 The party that fails to submit its reply and/or any additional submission within the
periods stated is deemed to have waived its right to submit its reply or additional
submission.
7.4.7 If the investigation was initiated upon a request for investigation, copies of all
submissions by the parties shall be furnished to the party that submitted the
request for investigation or the WESM Member being investigated, as applicable.
The responsibility to furnish copies shall be that of the party making the
submission.
7.5 CONFERENCES AND OCULAR INSPECTIONS
7.5.1 Conferences and ocular inspections of facilities involved in the investigation may
be conducted upon discretion of the Enforcement and Compliance Office through
appropriate notice to the party or upon request of the party being investigated.
Said notice or request shall specify the desired date and time of the activity.
7.6 REQUEST FOR INFORMATION AND TECHNICAL ADVICE
7.6.1 For the purpose of obtaining comprehensive information to aid in its investigation,
the Enforcement and Compliance Office has the authority to –
a) Request information from the System Operator, the Market Operator, or

other WESM Members, regardless that they are not parties to the
investigation;
b) Request from the Market Assessment Group any information that may be in
its possession as a result of the exercise of its monitoring and assessment
functions; and
c) Request information or data from the DOE, the ERC, and other government
agencies that have jurisdiction over the WESM Member or the WESM.
7.6.2 The Enforcement and Compliance Office may also request the Market Operator
or the System Operator, or any WESM Governance Committee other than the
Compliance Committee, to provide technical or expert advice on any issues that
is subject of or relevant to an investigation.

7.7 COMPLETION OF FORMAL INVESTIGATION
7.7.1 The formal investigation shall be completed not later than one hundred fifty (150)
business days from the receipt of the request for investigation as endorsed by
the requesting party.
7.7.2 An investigation report shall be issued on or before the end of the period referred
to in the preceding paragraph. It shall clearly set out the following –
d) Summary of preliminary matters and procedures carried out in the

investigation, from the initiation of the investigation to the completion of the
formal investigation;
e) List of information considered in the investigation and upon which the
findings of fact are based, and the sources of such information;
f) Findings of fact relating to the breach, as admitted by the parties or
determined in the course of the investigation;
g) Assessment and opinion, and the basis therefor;
h) On the basis of its findings, assessment and opinion, determination of the
existence or non-existence of a breach;
i) Recommended penalties or sanctions, if existence of a breach is confirmed;
and
j) Recommended remedial measures and other enforcement actions, as it
deems appropriate under the circumstances of the case.
7.7.3 Copies of the data, records, reports and other documents relied upon and
examined in the investigation and which served as bases for the findings,
assessment and recommendations of the Enforcement and Compliance Office
shall be made as annexes of the investigation report.
7.7.4 The investigation report and its annexes shall be submitted by the Enforcement
and Compliance Office to the Compliance Committee by serving copies of the
same to each committee member.
7.8 REVIEW OF INVESTIGATION
7.8.1 The Compliance Committee shall review all investigation reports submitted by
the Enforcement and Compliance Office on its next scheduled meeting after the
receipt of the investigation report. The review report of the Compliance
Committee shall be submitted to the PEM Board together with the investigation
report of the Enforcement and Compliance Office within thirty (30) business days
upon receipt of the investigation report.
7.8.2 The review report of the Compliance Committee shall clearly state whether it
agrees or disagrees with the investigation report of the Enforcement and
Compliance Office and the basis therefor. The Compliance Committee may
likewise recommend to the PEM Board that the case be remanded to the
Enforcement and Compliance Office for further investigations.

7.9 DECISION
7.9.1 The PEM Board shall, within thirty (30) working days from receipt of the review
report of the Compliance Committee, render a decision approving, disapproving
or modifying the sanctions, remedial measures, and other recommendations or
remanding the case to the Enforcement and Compliance Office for further
investigation.
7.9.2 The copy of the PEM Board decision on the investigation, accompanied by a
copy of the Investigation Report of the Enforcement and Compliance Office, and
the Review Report of the Compliance Committee, upon which the decision is
based, shall be provided to the concerned trading participant or the party being
investigated.
7.10 REMAND OF CASES
7.10.1 If a case is remanded to the Enforcement and Compliance Office by the PEM
Board, it shall rectify the identified shortcomings or carry out further investigation
and revise its investigation report accordingly, in accordance with the procedures
set out in this Section.
7.10.2 Within five (5) working days from receipt of the notice of the remand, the
Enforcement and Compliance Office shall notify the party investigated of the
remand and the reasons therefor. If the investigation was initiated upon a request
for investigation or a notice of probable breach, the parties that submitted the
same shall likewise be notified of the remand.
7.10.3 The Enforcement and Compliance Office, as it deems appropriate, may conduct
conferences and ocular inspections; require submission of market data and
reports from the Market Operator or the System Operator, or the Market
Assessment Group, or other WESM Members; request technical assistance from
the Market Assessment Group, the Market Operator, the System Operator or any
WESM Governance Committee; or require additional submissions from the party
being investigated. These shall be carried out following the applicable
procedures set out Sections in 7.4.5, 7.5.1, and 7.6.
7.10.4 The Enforcement and Compliance Office shall submit a revised investigation
report to the PEM Board within thirty (30) business days from remand of the case.
The revised investigation report shall clearly set out the procedures undertaken
and the changes in the findings, assessment and recommendations.
7.11 REQUEST FOR RECONSIDERATION OF THE PEM BOARD DECISION
7.11.1 The filing of any request for reconsideration of the PEM Board Decision shall be
governed by the relevant provisions of the WESM Penalty Manual.

7.12 NOTICE AND IMPLEMENTATION OF THE PEM BOARD DECISION
7.12.1 The decision or resolution of the PEM Board becomes final and executory, and
is binding on the parties to the investigation –
a. upon the lapse of the period within which to file a request for reconsideration
as set forth in the WESM Penalty Manual, and no request for reconsideration
was filed; or
b. upon issuance of the resolution on the Request for Reconsideration by the
PEM Board.
7.12.2 Upon finality of the decision or resolution of the PEM Board Decision, the PEM
Board, through its Corporate Secretary, shall immediately notify the Enforcement
and Compliance Office, the Compliance Committee and the concerned parties of
its decision or resolution. The Corporate Secretary of the PEM Board shall issue
a certification of the relevant resolution or the excerpt of the minutes of the
meeting of PEM Board.
7.12.3 The Enforcement and Compliance Office shall thereafter take the following
actions –
a) Issue a notice of penalty to the party investigated in accordance with the

requirements provided in the WESM Penalty Manual.
b) Provide a copy of the notice to the Market Operator to cause the billing and
collection of the amount due.
c) Where remedial measures are required, cause the implementation of the
same in accordance with Section 7.14.
d) Notify the Compliance Committee, ERC, and DOE of the action taken on the
investigation. The notification submitted shall serve as a compliance with the
obligation of the PEM Board set out in WESM Rules Clause 1.4.5.1 (e).
7.13 INVESTIGATION OF THE MARKET OPERATOR AND THE SYSTEM OPERATOR
7.13.1 Any provision in this Manual to the contrary notwithstanding, the investigation of
the System Operator or the Market Operator for probable breach of the Market
Rules shall be carried out in accordance with Sections 7.3 to 7.10.
7.13.2 A WESM Member or the WESM Governance Committee that has reasonable
grounds to believe that the Market Operator or the System Operator may be in
breach of the Market Rules shall submit a notice to the PEM Board of the
probable breach.
7.13.3 The notice shall be submitted within such period as to allow the Enforcement and
Compliance Office reasonable period within which to initiate an investigation
within the two-year period prescribed in Section 7.1.7. No investigation can be

initiated two (2) years after occurrence of the act or omission regardless that the
notice was submitted prior to the lapse of the two-year period.
7.13.4 The notice to be submitted to the PEM Board shall be in writing and shall clearly
set out the –
a) the specific provision of the Market Rules alleged to have been breached;
b) the specific acts or omissions constituting the possible breach; and
c) the periods, specifying if applicable the trading dates and trading intervals in
which the act or omission occurred.
7.13.5 Upon receipt of the notice, the PEM Board shall verify if the same substantially
contains the information required in the preceding section. If not, it shall return
the same to the requesting party which shall then rectify the shortcomings and
submit a new notice no later than five (5) working days from the receipt of the
notice from the PEM Board. If no revision is received within the five-day period,
the matter shall be deemed abandoned and no investigation shall be initiated
upon such notice.
7.13.6 Upon determination by the PEM Board that the Market Operator or the System
Operator may have committed a probable breach, it shall notify the Enforcement
and Compliance Office to initiate an investigation.
7.13.7 The Enforcement and Compliance Office shall commence the investigation by
issuing the notice of investigation to the System Operator or the Market Operator,
as applicable. The notice of investigation shall be issued in the same manner as
provided for in Section 7.3.
7.13.8 The System Operator or the Market Operator shall submit its reply within the
same period and the same manner as provided for in Section 7.4.
7.13.9 The formal investigation shall be conducted by the Enforcement and Compliance
Office in the same manner as set out in Sections 7.5 to 7.7, as these are
applicable. After the Enforcement and Compliance Office completes its
investigation, it shall prepare an investigation report clearly setting out the
matters required in Sections 7.7.2 and 7.7.3, and submit the same to the
Compliance Committee in accordance with Section 7.7.4.
7.13.10 The Compliance Committee shall review the investigation report submitted by the
Enforcement and Compliance Office and submit its investigation review report to
the PEM Board in accordance with Section 7.8.
7.13.11 Upon the results of the investigation, the PEM Board shall determine whether a
breach has been committed. If it determines that a breach has been committed,
it shall determine the remedial measures that should be carried out by the System
Operator or the Market Operator to rectify the breach, prevent its recurrence or

mitigate its impact. If it determines that no breach has been committed, it shall
direct the closure of the investigation.
7.13.12 The copy of the decision of the PEM Board shall be provided to the concerned
parties, and implemented in the same manner as that set out in Section 7.9.
7.13.13 If remedial measures are required to be implemented, the Enforcement and

Compliance Office, the Compliance Committee, or the PEM Board shall cause
the notification thereof to the concerned parties in accordance with Section 7.14.
If the breach is not remedied or the remedial measures are not implemented in
full or in part, the PEM Board may file a formal complaint to the ERC and the
DOE.
7.14 REMEDIAL MEASURES
7.14.1 Remedial measures are tasks or actions that are required of a WESM Member
being investigated or found in breach for the purpose of mitigating or preventing
the adverse impact of breach or to prevent recurrence of the breach. They may
be required when the act or omission subject of the investigation may –
a) Negatively impact trading in the WESM and would likely prevent orderly and
efficient trading or settlement;
b) Lead to unfair or unreasonable WESM prices;
c) Cause material negative impact on the viability and sustainability of the
WESM or the functions of the Market Operator if not immediately remedied;
or
d) Cause material negative impact on the system or the functions of the System
Operator if not immediately remedied.
7.14.2 It is understood, however, that compliance by a party investigated with remedial

measures that were required while an investigation or the compliance monitoring
and assessment is still pending is not deemed an admission of the breach.
7.14.3 A WESM Member may be required to implement remedial measures by the

Enforcement and Compliance Office, the Compliance Committee or the PEM
Board.
7.14.4 The Enforcement and Compliance Office or the Compliance Committee may
require that remedial measures be carried out pending completion of an
investigation if it determines that the immediate implementation of such
measures is necessary to prevent or mitigate an adverse impact caused by the
acts or omissions of the WESM Member that are subject of the investigation.
Where directed by the Enforcement and Compliance Office or the Compliance
Committee the remedial measures are implemented as provisional remedies until
the PEM Board finally decides on the final remedial measures that have to be
implemented.

7.14.5 The Enforcement and Compliance Office may require implementation of remedial
measures at any time during the compliance monitoring and assessment or after
it initiates an investigation and before it completes and submits its investigation
report.
7.14.6 The Compliance Committee may require a WESM Member to implement

remedial measures in the course of its review of an investigation and before it
submits its investigation review report to the PEM Board. The Committee shall
inform the Enforcement and Compliance Office of the remedial measures that
are required to be implemented.
7.14.7 The final remedial measure directed by the PEM Board shall be contained in the
notice of penalty served on the WESM Member. For provisional remedial
measures directed by the Enforcement and Compliance Office or the Compliance
Committee, a notice of provisional remedial measures shall be issued by the
Enforcement and Compliance Office and served on the WESM Member.
7.14.8 If the remedial measure required is of such nature that can be immediately
implemented or started, the WESM Member so directed shall implement the
same immediately upon receipt of the notice. Within five (5) working days from
receipt of the relevant notice, the party shall notify the Enforcement and
Compliance Office in writing that the measure required has been implemented or
started and the details of the implementation.
7.14.9 If the remedial measure required is of such nature that it cannot be immediately
implemented and completed, the WESM Member so directed shall, within five (5)
business days from receipt of the relevant notice, submit its compliance plan to
the Enforcement and Compliance Office. The plan shall detail the manner and
period within which the party concerned shall implement and complete the
remedial measure. As appropriate, the plan shall specify the manner by which
the WESM Member intends to mitigate any adverse effect, to operate or modify
its equipment or facility, or to otherwise conduct its operations in order to carry
out or accomplish the remedial measure.
7.14.10 The Enforcement and Compliance Office shall monitor the compliance by the
WESM Member to ensure that the remedial measures are implemented as
directed. As part of its monitoring, the Enforcement and Compliance Office may
issue such reminders or notices to the WESM Member as it deems appropriate
from time to time. The WESM Member may also be required to submit periodic
reports of its compliance, as well as to allow ocular inspection of its facilities if
appropriate.
7.14.11 Upon complete implementation of the compliance plan or lapse of the period
within which the compliance plan is required to be implemented, the Enforcement
and Compliance Office shall submit a report to the PEM Board detailing the
results of the implementation.

7.14.12 A failure to implement the required remedial measure, in whole or in part, shall
be considered a breach and shall be subject to penalties as set out in the WESM
Penalty Manual. The sanction shall be imposed by the PEM Board, upon
recommendation of the Enforcement and Compliance Office, without need of
further investigation.
7.15 COSTS
7.15.1 The PEM Board shall decide on the costs associated with any investigation and
with the implementation of decisions and remedial measures that will be
shouldered by WESM Member involved in the investigation. The costs to be
imposed shall be in accordance with a schedule of costs and charges that the
PEM Board shall determine and review from time to time. The schedule of costs
and charges, and any changes on it, shall be published in the market information
website before it takes effect.
7.15.2 Notwithstanding the foregoing, the costs associated with the day-to-day
operations of the Enforcement and Compliance Office, the Market Assessment
Group, and the Compliance Committee shall not be passed on to a WESM
Member as cost associated with any investigation, decision or remedial measure.
These shall instead be included in the annual revenue requirements of the PEMC
which shall be defrayed through the market fees.
7.16 SERVICE OF NOTICES AND REPORTS
7.16.1 All notices required to be issued to and served on WESM Members under this
Section shall be issued to and served on the WESM Member through its WESM
Compliance Officer as appears on the records of the Enforcement and
Compliance Office, or if none is designated, through any one of the main contact
persons, president or chief executive officer of the WESM Member as appears in
the records of the Market Operator. At its discretion, WESM Member may also
designate another person as its authorized representative for a specific
investigation, provided that such designation shall be considered as made for
that investigation only.
7.16.2 All notices shall be served at the office addresses of the above-named persons
as this information appears in the records of the Enforcement and Compliance
Office or the Market Operator. WESM Members have the obligation to ensure
that their contact information provided to the Enforcement and Compliance Office
and to the Market Operator is current at all times regardless that they are not
subject of any investigation.
7.16.3 Service of notices and reports by the Enforcement and Compliance Office to all
specified recipients as well as all notices and submissions to the Enforcement
and Compliance Office may be made by personal service, postal mail, or by
electronic mail. Personal service includes service by in-house or third party
messengerial services or by commercial couriers. Service is deemed to have

been made upon: (a) actual delivery if made by personal service; or (b) upon
deposit in the post office if by postal mail, notwithstanding in either case that the
same was returned undelivered or that the intended recipient refused the
delivery; or (c) by actual receipt and acknowledgment by the intended recipients
by electronic mail.

SECTION 8 NON-COMPLIANCE REPORT
8.1 RATIONALE
8.1.1 The compliance monitoring and assessment of the market obligations of the
WESM Members is one of the enforcement processes established under this
Manual.
8.1.2 Self-reports by WESM Members of their possible non-compliances will provide

the Enforcement and Compliance Office the information that it will need to more
effectively carry out its compliance monitoring tasks. This will also help in
lessening the possibility that the monitoring and screening by the Enforcement
and Compliance Office of WESM Member compliance will result in error arising
from incomplete information. This is particularly important considering that the
results of the compliance monitoring may lead to the initiation an investigation for
a possible breach.
8.2.1 This section shall only apply to obligations of WESM Members which, if not
complied with, shall constitute a breach as defined in this Manual and in the
WESM Penalty Manual as well as relevant provisions of the Market Rules.
8.3 NON-COMPLIANCE REPORTS
8.3.1 WESM Members that were or that expect to be unable to comply with an
obligation under the Market Rules, which if not complied with may constitute a
breach, are required to submit to the Enforcement and Compliance Office a non-
compliance report in a prescribed form and following the procedures set out in
this Section.
8.3.2 To avoid duplication of reports, the significant event reports and supporting data
submitted by Trading Participants or WESM Members in compliance with the
requirements of WESM Rules Clause 3.5.11.7 shall serve as non-compliance
report for the event being reported. The Enforcement and Compliance Office
may, however, require the Trading Participant or WESM Members to submit
additional information or data in accordance with Section 8.4 of this Manual.
8.3.3 For the avoidance of doubt, no non-compliance report needs to be submitted to

the Enforcement and Compliance Office in accordance with this Manual for the
following non-compliances –
a) Failure to comply with prudential requirements, or the occurrence of any

event of default, or failure to pay sums of money to the Market Operator
pursuant to Chapter 3 of the WESM Rules, or price determination
methodologies approved by the ERC for use in the WESM, and associated
Market Manuals; or

b) Failure to comply with requirements for registration in or for continuing
membership in the WESM pursuant to Chapter 2 of the WESM Rules and
associated Market Manuals, and in the Retail Rules.
8.4 CONTENTS OF NON-COMPLIANCE REPORTS
8.4.1 The non-compliance report shall contain the following information, it being
understood that these are high level descriptions of the contents of the report and
that the Enforcement and Compliance Office may prescribe more specific
information or detail –
a) The rule or obligation that has not been complied with or that with which the
WESM Member expects it may not be able to comply;
b) The specific facility involved;
c) The date and time or trading interval that the non-compliance has occurred;
d) The reasons for the non-compliance;
e) Where appropriate, the measures taken or proposed to be taken to mitigate
the impact of the non-compliance, as well as to avoid recurrence in the
future; and
f) Where appropriate, the reporting WESM Member shall submit additional
information, records or documents that will support the facts being reported.
8.4.2 The Enforcement and Compliance Office may prescribe the format of the report
and the details of the information that it requires for the purpose of facilitating
submission and evaluation of the reports, and may modify the same from time to
time. The Enforcement and Compliance Office shall notify all WESM Members
of the prescribed format and required information. The Enforcement and
Compliance Office shall ensure that the report format shall not be unduly
burdensome on the part of the WESM Member.
8.4.3 If the Enforcement and Compliance Office determines that the report submitted
is not in the prescribed format, or not all the required information was provided,
it shall notify the WESM Member and require that the shortcomings be rectified.
The WESM Member so directed shall submit a revised non-compliance report or
submit the missing information no later than three (3) working days upon being
notified.
8.5 SUBMISSION OF NON-COMPLIANCE REPORTS
8.5.1 Unless the Enforcement and Compliance Office provides for a different period,
non-compliance reports shall be submitted on the business day after a non-
compliance has occurred. Where appropriate, the non-compliance report for a
trading day shall include all non-compliances or events that occurred during the
trading day being reported.
8.5.2 The WESM Member may also submit a non-compliance report when it expects
the occurrence of event/s that may result in a possible non-compliance with its

obligations in the WESM. When a non-compliance report was submitted in
advance of an event, the WESM Member shall not be required to submit another
report pursuant to the foregoing section, unless the actual circumstances varied
from what was previously reported. In such case, the WESM Member shall
submit a revised non-compliance report no later than the business day after the
event or occurrence of the non-compliance.
8.5.3 Non-compliance reports shall be submitted in the manner prescribed by the

Enforcement and Compliance Office which shall notify all WESM Members of a
prescribed report format. The Enforcement and Compliance Office may not,
however, refuse to accept a report by reason that same was not submitted in the
prescribed manner, but may only require rectification pursuant to Section 8.4.3.
8.5.4 The Market Operator or the Enforcement and Compliance Office may, if
practicable, develop and provide a facility that will allow WESM Members to
submit non-compliance reports through electronic means. If provided, such
facility shall be made available to all WESM Members without discrimination and
subject only to compliance with registration and access requirements that will be
set by the Market Operator or the Enforcement and Compliance Office. If a facility
is so provided, all reports shall be submitted through such facility.
8.6 ACTION ON NON-COMPLIANCE REPORTS
8.6.1 The Enforcement and Compliance Office shall evaluate non-compliance reports
submitted by WESM Members as part of the compliance monitoring and
assessment procedure set out in Section 6 of this Manual. As provided for in
Section 6, non-compliance reports, and all the supporting documents related
thereto, shall be among the information that shall be considered and assessed
together with all the market data made available to the Enforcement and
Compliance Office in determining whether or not a Notice of Specified Penalty is
issued against a WESM Member. For this reason, the Notice of Specified Penalty
may be issued as a result of compliance monitoring and assessment without
need of a formal investigation. The Notice of Specified Penalty to be issued for
this purpose shall be signed by the PEMC President in accordance with Section
3.2 of the WESM Penalty Manual.
8.6.2 A finding of breach may thus be made and enforcement action may be taken
against a WESM Member on the basis of the non-compliance report and its
supporting documents submitted by the WESM Member, the market data and
information from the Market Operator, the System Operator, and other relevant
market data.
8.6.3 The non-compliance reports submitted by WESM Members or any information

contained therein may also be made available by Enforcement and Compliance
Office to other units within PEMC or to any WESM Governance Committee to be
utilized for market assessment, surveillance and audit purposes.

SECTION 9 WESM MEMBER INTERNAL COMPLIANCE
9.1.1 By having registered to participate in the WESM as either a service provider or

trading participant, all WESM Members have the primary obligation to comply
with the Market Rules. Such obligation likewise extends to compliance with other
rules and regulations of other regulatory agencies where compliance with such
will, in turn, impact on WESM compliance. Among other things, this includes
compliance with environmental standards, such as emission standards for coal
power plants, licensing requirements, franchise conditions and reportorial
requirements of various government agencies.
9.1.2 Fostering a culture of compliance is encouraged through proactive compliance

by WESM Members of their obligations under the Market Rules. Proactive
compliance can lead to fewer breaches and, in turn, to less frequent imposition
of penalties.
9.1.3 Towards achieving the objective of fostering a culture of compliance, the WESM
Rules Clause 7.2.9.1 directs that each WESM Member, and the Market Operator
shall designate a WESM Compliance Officer in their respective organizations.
9.2 WESM MEMBER INTERNAL COMPLIANCE
9.2.1 WESM Members are encouraged to develop and maintain an in-house

compliance program within their organizations with the end in view of ensuring
that their relevant personnel, systems and processes, infrastructure and
organizational activities are geared towards achieving and ensuring WESM
compliance. Among other things, it is encouraged that in-house compliance
activities include processes for readily detecting occurrence of probable breach,
and for implementing corrective and preventive measures once detected.
9.2.2 Compliance programs should also cover counterparties and other third parties
whose dealings can impact on the ability of the WESM Member to ensure WESM
compliance.
9.2.3 Compliance activities should also include education of employees,

counterparties and other relevant third parties on the operations of the WESM
and on provisions of Market Rules relevant to their respective operations and
activities and how such operations and activities, in turn, impact on WESM
compliance.
9.3 WESM COMPLIANCE OFFICERS
9.3.1 All WESM Members, as well as the Market Operator shall designate a WESM
Compliance Officer within their respective organizations and shall comply with
obligations set forth in Clause 7.2.9 of the WESM Rules.

9.3.2 In January of each year, and at any time a new WESM Compliance Officer is
designated, the WESM Member shall submit the names of its WESM Compliance
Officer and such other details and in such form as may be required by the
Enforcement and Compliance Office. They shall ensure that information
submitted is current at all times. The Enforcement and Compliance Office shall
maintain a registry of the incumbent WESM Compliance Officers of all WESM
Members. A WESM Member shall be responsible for ensuring that the
information submitted to the Enforcement and Compliance is current at all times.
9.3.3 It is required that the person to be appointed as WESM Compliance Officer

should have an understanding of the WESM compliance requirements of their
organization, and is of a position that he or she is able to recognize possible non-
compliances and has sufficient authority to resolve the same. As such, he or she
should occupy a senior management position such as those pertaining, but not
limited, to legal, risk management, regulatory or compliance.
9.4 OBLIGATIONS OF WESM COMPLIANCE OFFICERS
9.4.1 As prescribed in WESM Rules Clause 7.2.9.2, WESM Compliance Officers shall:
a) Monitor the activities and transactions in the WESM of his or her organization
and carry out measures to ensure compliance by his or her organization with
the EPIRA, its Implementing Rules and Regulations, the Market Rules; and,
for this purpose, put in place necessary procedures and guidelines;
b) Keep abreast with developments in the WESM, including amendments to

Market Rules as well as issues raised by the WESM Governance
Committees and the PEM Board affecting his or her organization’s
compliance, and ensure that relevant personnel and units within his or her
organization are informed of and, if appropriate, will implement changes in
the organization’s internal systems and processes to comply with
amendments to Market Rules and to resolve issues raised;
c) From time to time and if it deems it necessary or appropriate, propose

amendments to the Market Rules to enhance or develop the WESM
enforcement and compliance and to promote good commercial and technical
practices;
d) Be the main point of contact that is responsible in coordinating with the

Enforcement Compliance Office on all matters relating to the WESM
enforcement, compliance and governance, including the provision of the
necessary information and data, as may be required by any of the WESM
Governance Committees and by the Enforcement and Compliance Office;
e) Submit to the Enforcement and Compliance Office a report of his/her

organization’s compliance with Market Rules covering such period, but not

less frequent than annually, and in such form as may be prescribed by the
Enforcement and Compliance Office.
9.5 ANNUAL WCO REPORT
9.5.1 Pursuant to WESM Rules Clause 7.2.9.2, all WESM Compliance Officers shall
submit a report to the Enforcement and Compliance Office which shall state the
compliance activities undertaken and the enforcement-related issues and
concerns that have arisen during a calendar year.
9.5.2 The report shall be submitted to the Enforcement and Compliance Office in such
form and number of copies as the latter may require. The reports shall be
submitted not later than 31 January of the following year, or on such other period
as the Enforcement and Compliance Office may set from time to time. The
Enforcement and Compliance Office shall notify all WESM Members, from time
to time, of the form and number of copies required, and the period for submission
of the report if a date other than 31 January is set.
9.5.3 An annual consolidated report shall be submitted by the Enforcement and

Compliance Office to the DOE and the PEM Board no later than sixty (60) days
from the last day for submission of reports by the WESM Compliance Officers.

SECTION 10 INFORMATION DISCLOSURE AND RECORDS
MANAGEMENT
10.1.1 The provisions of this section refer only to the obligation of the Enforcement and
Compliance Office in respect to the handling of information and records that
comes to its possession as it carries out its functions under this Manual, as well
as to its obligation to prepare, disseminate and publish reports.
10.2 INFORMATION DISCLOSURE AND PUBLICATION
10.2.1 The Enforcement and Compliance Office shall publish the following information
in the market information website –
a) List of investigations initiated, including the parties and facilities involved, the
possible breach subject of the investigation, and the status of the
investigation;
b) Summarized description of the results of an investigation, including the
names of the parties and facilities involved, the nature of the breach
confirmed in the investigation, penalties or sanctions imposed, and remedial
measures required; and
10.2.2 Copies of investigation reports and investigation review reports prepared in

respect to an investigation for breach shall be provided by the Enforcement and
Compliance Office upon request and, if so required by the Enforcement and
Compliance Office, upon payment of reasonable fees to defray cost of retrieval,
reproduction and transmittal –
10.2.3 Notwithstanding the foregoing, copies of records and documents submitted by a

party in respect to an investigation, may not be provided to any other party
without the written consent of the owner of such record or document or the party
that submitted the same. Thus, where such records or document are annexed to
an investigation or assessment report, the copies of the latter that will be
disseminated will exclude such records or documents. This prohibition, however,
does not cover data, documents or records that are otherwise published or
disseminated by the Market Operator or other parties.
10.3 REPORTING REQUIREMENTS
10.3.1 The Enforcement and Compliance Office shall submit a monthly report to the
PEM Board, the Market Surveillance Committee, the Compliance Committee, the
DOE and the ERC containing information on the following –
a) Status of investigations, applications for exemptions being carried out, with

summarized description of the same;
b) Summary of the results of non-compliance monitoring carried out;

c) Summary of the development of non-compliance issues and enforcement
processes;
d) Recommendations that may arise from the experiences and observations in
administering the compliance and enforcement procedures; and
e) Issues and problems arising from the implementation of the procedures and
provisions established in this Manual.
10.3.2 The Enforcement and Compliance Office shall likewise prepare, publish and
disseminate such report as may be required of it from time to time by the PEM
Board, DOE or ERC in respect to enforcement and compliance in the WESM; or
such report as the Enforcement and Compliance Office may deem appropriate
or necessary from time to time.
10.4 COMPLIANCE DATABASE AND RECORDS RETENTION
10.4.1 Subject to the required retention period set out in this Section, the Enforcement
and Compliance Office shall organize and maintain a compliance database that
shall contain, the following –
a) Records of investigations, including but not limited to the investigation

reports and their attachments, the investigation review reports, PEM Board
action on investigations, data and records used in the investigation,
submissions of parties investigated, and notices and communications issued
and received pertaining to an investigation.
b) Non-compliance reports and supporting documents submitted by WESM

Members.
c) Monthly and periodic reports required to be prepared and published or

disseminated by the Enforcement and Compliance Office under this Manual.
10.4.2 Access to the database shall be limited to the Enforcement and Compliance
Office, although copies of records contained therein which are not covered by
prohibited disclosure may be provided to other parties upon request.
10.4.3 The foregoing records required to be maintained in the compliance database

shall be retained in electronic form for the periods set out in the following table.
Retention
Record Start of Retention Period
Period
Records of investigation Date of final action on the case,

10 years
cases i.e., final PEM Board approval
Non-compliance reports of
Date of submission of report 10 years
WESM Members

Retention
Record Start of Retention Period
Period
Date of the final action on the

Records of applications for
application, i.e., final PEM 10 years
exemption
Board action
Date of first publication or first

Monthly and periodic reports 5 years
dissemination
Reports published in market Date of first publication or first

5 years
information website dissemination

SECTION 11 LIMITATION OF LIABILITY AND INDEMNIFICATION
11.1 LIMITATION OF LIABILITY
11.1.1 The members of the PEM Board and the Compliance Committee, whether acting
individually or jointly, the Enforcement and Compliance Office Head and the
members of the staff of the Enforcement and Compliance Office, and the PEMC
President shall not be made personally liable for any loss or damage incurred by
a WESM Member, the Market Operator or the System Operator or any other
person as a consequence of any act or omission undertaken in the performance
of the duties and responsibilities contained in this Manual and other Market
Rules. This is except when the person acted with malice, manifest partiality, bad
faith, gross incompetence or gross negligence.
11.2 INDEMNIFICATION
11.2.1 Should any of the persons named in Section 11.1.1 be made liable for any
amount for loss or damage suffered or incurred by any person or entity as a
consequence of any of its acts or omissions in the performance of its duties as
prescribed in this Manual and other Market Rules, the PEMC shall indemnify said
persons through an indemnification process to be developed by the PEM Board.
It is provided, however, that the indemnification shall exclude any liability arising
out of conduct involving malice, manifest partiality, bad faith, gross incompetence
or gross negligence. Said indemnification shall cover the full amount adjudged,
and the costs and expenses incurred by the person involved in defending himself
or herself in the related proceedings.

SECTION 12 AMENDMENT, PUBLICATION AND EFFECTIVITY
12.1 AMENDMENTS
12.1.1 Any amendments to this Manual shall be approved by the DOE, following the
procedures for changes to Market Manuals set out in the WESM Rules and in
the relevant Market Manual.
12.2 PUBLICATION AND EFFECTIVITY
12.2.1 This Market Manual, as it may be amended from time to time, shall be published
in the market information website maintained by the Market Operator.
12.2.2 This Market Manual or any amendments thereto shall become effective upon
approval of the DOE in accordance with WESM Rules Clause 8.6.4. The date of
effectivity shall be indicated in this document.

SECTION 13 GLOSSARY
Term or
Definition
Abbreviation
Breach Act or omission that constitutes a violation or non-compliance with
any provision of the Market Rules that are expressly provided for
as subject of sanctions and penalties if committed.
An integral part of enforcement proceedings in the WESM that is
initiated and carried out by the Enforcement and Compliance
Office, primarily for the purpose of determining the occurrence of
Compliance
breach of the Market Rules. Assessment is done by taking into
Monitoring and
consideration all the relevant and verified market data and
Assessment
information from the Market Operator, the System Operator, the
WESM Members, among others, with the end in view of
determining the appropriate enforcement actions, if warranted.
Compliance plan A plan detailing the actions or tasks required to be carried out by
a WESM Member to implement a remedial measure.
Enforcement This is the process by which a WESM Member found in breach is
imposed penalties, which may be financial or non-financial in
nature, and/or required to take corrective actions or remedial
measures as a consequence of the breach.
Enforcement action This is an action carried out against a WESM Member as a
consequence of the breach by that WESM Member of the WESM
Rules or Market Manuals, which may include imposition of
penalties, carrying out remedial measures and other corrective
actions.
Enforcement and The unit created within PEMC pursuant to WESM Rules Clause
Compliance Office 1.4.8, which is primarily responsible for the administration of the
enforcement and compliance which shall include monitoring,
assessment and investigation of the WESM Members in relation
to their compliance with the WESM Rules.
Enforcement and This is the person appointed pursuant to the WESM Rules that will
Compliance Office head the Enforcement and Compliance Office.
Head
Enforcement This is the activity or series of activities carried out to establish and
proceeding determine the occurrence of breach and the corresponding
enforcement action that will be carried out as a consequence of
the breach, and includes monitoring, assessment, investigation
and imposing enforcement actions.
Exemption This is the authority granted by the PEM Board exempting a
WESM Member from sanctions for non-compliance with an
obligation, which would otherwise amount to a breach if no
exemption was granted.
An integral part of enforcement proceedings in the WESM that may
Investigation be initiated by the Enforcement and Compliance Office, from a
notice of probable breach by the Market Operator or the System

Term or
Definition
Abbreviation
Operator, or by request for investigation from other WESM
Members or WESM Governance Committees.
Market participation The agreement required by the Market Operator to be executed by
agreement a WESM Member upon its registration in the WESM that, among
other things, obliges the WESM Member to comply with the WESM
Rules.
Market Manuals This refers collectively to the Market Manuals approved for use in
the WESM to implement the Market Rules.
Market Rules This refers collectively to the Market Rules to which this Manual
applies.
Non-compliance A report submitted pursuant to Section 8 of this Manual by a
report WESM Member that is unable to comply with any of its obligation
under the Market Rules or Market Manuals.
Notice of provisional A notice in writing issued by the Enforcement and Compliance
remedial measure Office directing a WESM Member to implement a remedial
measure pending completion of an investigation.
Notice of investigation Formal notice issued by the Enforcement and Compliance Office
to a WESM Member to initiate an investigation for possible breach.
Remedial measure An action or task required to be carried out by a WESM Member
to reduce or remove adverse impact of a breach (i.e., mitigation),
or prevent the recurrence of a breach (i.e., prevention), or the
cessation of an act or activity constituting or causing a breach or
an action or task carried out leading to such cessation (i.e.,
correction).
Report of probable Written report submitted to the Enforcement and Compliance
breach Office by the Market Operator or the System Operator to notify the
Enforcement and Compliance Office of probable breach by a
WESM Member for purposes of initiating an investigation.
Request for Written request submitted to the Enforcement and Compliance
investigation Office by any WESM Member, WESM Governance Committee, or
any other party, other than the Market Operator or System
Operator, to notify the Enforcement and Compliance Office of
possible breach by a WESM Member for purposes of initiating an
investigation.
WESM Compliance Person designated by WESM Members, System Operator, Market
Officer Operator, Metering Services Provider and any other WESM
service providers within their respective organizations pursuant to
and the perform the functions set out in WESM Rules Clause 7.2.9.
WESM Penalty The Market Manual that set outs the schedule of possible
Manual, or Penalty breaches and the corresponding penalties or sanctions that can be
Manual imposed, and the manner of carrying out such sanctions.

APPENDIX I
COMPLIANCE MONITORING, INVESTIGATION, RECONSIDERATION, AND APPEAL

PROCESS TIMELINE EMANATING FROM COMPLIANCE MONITORING ACTIVITY OF
ECO 14
Facility/Mode/ Timeline/ Reference Manual/

Activities Responsible Recipient
Process Frequency Document
1. Initial Flagging of ECO through

NMMS-CMON TP Near Real-Time EC Manual
Probable Breach IEMOP
3 business days from

2. Submission of Reply and
TP CPEMS ECO initial flagging of EC Manual
Supporting Documents
probable breach
3. Validation and
ECO CPEMS N/A Daily EC Manual
Assessment
On or before 15th day of

4. Issuance of CMAR ECO CPEMS TP the month following the EC Manual
covered billing month
5. Issuance of Notice of PEMC TP Simultaneous with the

Manual WESM Penalty Manual
Specified Penalty President IEMOP Issuance of CMAR
6. Implementation of the
Notice of the Specified
IEMOP Manual TP receipt of the Notice of WESM Penalty Manual
Penalty (Issuance of
Specified Penalty
billing)

7. Payment of Penalty TP Manual IEMOP receipt of billing and WESM Penalty Manual
collection
8. Filing of Request for 15 business days from

TP Manual ECO WESM Penalty Manual
Reconsideration receipt of the CMAR

9. Resolution of the Request TP
ECO Manual receipt of request for WESM Penalty Manual
for Reconsideration IEMOP
reconsideration
10. Issuance of Notice of

Simultaneous with the
Specified Penalty or
PEMC TP Issuance of Resolution
Revocation of the Manual WESM Penalty Manual
President IEMOP of Request for
previously-issued Notice
Reconsideration
of Penalty

Resolution of the Request
for Reconsideration/ Immediately upon
IEMOP Manual TP WESM Penalty Manual
Notice of Specified receipt
Penalty/ Revocation
(Collect or Refund)
14 The compliance monitoring and assessment activity referred to herein pertains only the Possible Non-Compliance with the Offered
Capacity Compliance Rules and the Dispatch Conformance Standards Under the Enhanced WESM Design

Facility/Mode/ Timeline/ Reference Manual/
Activities Responsible Recipient
Process Frequency Document

receipt of the
WESM Penalty Manual
12. Filing of Appeal TP Manual MSC Resolution of the
and MS Manual
Request for
Reconsideration
13. Issuance of Order to ECO
20 business days from WESM Penalty Manual
Elevate the Original MSC Manual TP
receipt of Appeal and MS Manual
Records of the Case
14. Elevation of the Original MSC 5 business days from WESM Penalty Manual
ECO Manual
Records of the Case receipt of the Order and MS Manual
30 working days from

receipt of the Original
TP WESM Penalty Manual
15. Decision on Appeal MSC Manual Records of the Case
ECO and MS Manual
as elevated to it by
ECO

Specified Penalty or • Simultaneous with
PEMC TP WESM Penalty Manual
Revocation of the Manual the Issuance of the
President IEMOP and EC Manual
previously-issued Notice Decision on Appeal
of Penalty

Decision on Appeal/
Immediately upon
Notice of Specified IEMOP Manual TP WESM Penalty Manual
receipt
Penalty/ Revocation
(Collect or Refund)
ACRONYMS
NMMS-CMON New Market Management System – Compliance Monitoring Module

CPEMS Compliance Post-Evaluation Monitoring System
AMS Accounts Management System
TP Trading Participant
MSC Market Surveillance Committee
IEMOP Independent Electricity Market Operator of the Philippines
ECO Enforcement and Compliance Office

APPENDIX II
INVESTIGATION, RECONSIDERATION, AND APPEAL PROCESS TIMELINE
EMANATING FROM THE REQUESTS FOR INVESTIGATION15
Reference
Facility/Mode/ Timeline/
Activities Responsible Recipient Manual/
Process Frequency
Document
Any WESM
Member, Market
Within 2 years from
Operator, WESM
1. Filing of Request for occurrence of the act or
Governance Manual ECO EC Manual
Investigation (RFI) omission constituting
Committees
the probable breach.
(except CC), ECO
(motu propio)
2. Issuance of Preliminary
TP (entity 5 business days from
Notice of Investigation ECO Manual EC Manual
subject of RFI) receipt of the RFI
(PNI)
Not more than 120

TP (entity
3. Investigation Proper ECO Manual business days from EC Manual
subject of RFI)
receipt of RFI
Not more than 150

4. Completion of Formal TP (entity
ECO Manual business days from EC Manual
Investigation subject of RFI)
receipt of RFI
Within the period set for

5. Issuance of
ECO Manual CC the completion of EC Manual
Investigation Report
Formal Investigation
Within thirty (30)

6. Review of the business days from EC Manual and
CC Manual N/A
Investigation Report receipt of the MS Manual
Within thirty (30)

7. Preparation and
business days from EC Manual and
Submission of Review CC Manual PEM Board
receipt of the MS Manual
Report
Within thirty (30)

8. PEM Board Review of working days upon
the CC Review Report receipt of the MSC EC Manual and
PEM Board Manual N/A
and ECO Investigation Review Report and CC Manual
Report ECO Investigation
Report
9. Issuance of Notice of Immediately upon

PEM Board Manual ECO EC Manual
Remand, if necessary review of the Reports
10. Submission of Revised Within thirty (30)

Investigation Report (in ECO Manual PEM Board business days from EC Manual
case of remand) receipt of the remand
15The compliance monitoring and assessment activity referred to herein pertains only the Possible Non-Compliance with the Offered
Capacity Compliance Rules and the Dispatch Conformance Standards Under the Enhanced WESM Design

Reference
Process Frequency
Document
Within thirty (30)

11. PEM Board Review of
working days upon EC Manual and
the Investigation Report PEM Board Manual N/A
receipt of the Revised CC Manual
(in case of remand)
• Within thirty (30)

working days from
receipt of the MSC
Review Report and
12. Board Action on the
ECO Investigation
Investigation and
Report; or
Issuance of Notice of EC Manual and
PEM Board Manual PEMC
Board Action (PEM CC Manual
• Within thirty (30)
Board Resolution on
working days from
Investigation Report)
receipt of the
Revised Investigation
Report of the ECO (in
case of remand).
Upon receipt of PEM

13. Notification of the PEM TP WESM Penalty
PEMC Manual Board Resolution on
Board’s Resolution Manual

WESM Penalty
14. Issuance of Notice of TP Issuance of Notice of
PEMC President Manual Manual and EC
Specified Penalty IEMOP PEM Board’s
Manual
Resolution

Notice of the Specified WESM Penalty
IEMOP Manual TP receipt of the Notice of
Penalty (Issuance of Manual
Specified Penalty
billing)

WESM Penalty
16. Payment of Penalty TP Manual IEMOP receipt of billing and
Manual
collection
PEM Board 15 business days from

WESM Penalty
17. Filing of Request for (through receipt of the Notice of
TP Manual Manual and EC
Reconsideration Corporate the PEM Board
Manual
Secretary) Resolution
PEM Board
18. Endorsement of the Immediately upon
(through
Request for Manual ECO receipt of Request for EC Manual
Corporate
Reconsideration Reconsideration
Secretary)
Within 30 business days WESM Penalty

19. Submission of Revised
ECO Manual PEM Board from endorsement of Manual and EC
the PEM Board Manual
20. Resolution of the 30 working days from

WESM Penalty
Request for PEM Board Manual PEMC receipt of the Revised
Manual
Reconsideration Investigation Report

Reference
Process Frequency
Document

Specified Penalty or WESM Penalty
TP Issuance of Resolution
Revocation of the PEMC President Manual Manual and EC
IEMOP of Request for
previously-issued Notice Manual
Reconsideration
of Penalty

Resolution of the
Request for
Immediately upon WESM Penalty
Reconsideration/ Notice IEMOP Manual TP
receipt Manual
of Specified Penalty/
Revocation (Collect or
Refund)

WESM-ECM 1.0 23oct2021

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PUBLIC

Enforcement and Compliance

Approval Date: 30-Jun-2021 | Publication Date: 22-Oct-2021

Enforcement and Compliance Manual i

1.1 Purpose ..................................................................................................................... 1

1.2 Scope of Application .................................................................................................. 1

SECTION 2 DEFINITIONS, REFERENCES AND INTERPRETATION .............................. 2

2.1 Definitions ................................................................................................................. 2

2.2 References ................................................................................................................ 2

2.3 Interpretation ............................................................................................................. 2

SECTION 3 LEGAL AND REGULATORY FRAMEWORK ................................................. 3

3.1 Legal Basis ................................................................................................................ 3

3.2 Enforcement of the Market Rules .............................................................................. 4

3.3 Scope of Market Enforcement and Sanctions ............................................................ 4

3.4 Enforcement Actions under the WESM Rules............................................................ 4

SECTION 4 RESPONSIBILITIES ...................................................................................... 6

4.1 Philippine Electricity Market Board ............................................................................ 6

4.2 Compliance Committee ............................................................................................. 6

4.3 Enforcement and Compliance Office ......................................................................... 7

4.4 PEMC President ........................................................................................................ 9

4.5 Market Assessment Group ........................................................................................ 9

4.6 WESM Governance Committees ............................................................................... 9

4.7 Market Operator ........................................................................................................ 9

4.8 System Operator ..................................................................................................... 10

4.9 WESM Members ..................................................................................................... 10

Enforcement and Compliance Manual ii

5.1 Definition of Breach ................................................................................................. 11

5.2 Enforcement Proceedings ....................................................................................... 11

5.3 Enforcement Actions for Breach .............................................................................. 13

SECTION 6 PROCEDURES FOR COMPLIANCE MONITORING AND ASSESSMENT . 14

6.1 Guiding Principles ................................................................................................... 14

6.2 Flagging of Probable Breach ................................................................................... 14

6.3 Submission of Reply and Supporting Documents .................................................... 15

6.4 Validation and Assessment ..................................................................................... 15

6.5 Issuance of Report .................................................................................................. 16

6.6 Reconsideration and/or Appeal................................................................................ 16

6.7 Issuance of Notice of Specified Penalty ................................................................... 16

SECTION 7 PROCEDURES FOR INVESTIGATION AND REVIEW................................ 17

7.1 Guiding Principles ................................................................................................... 17

7.2 Initiation of Investigation .......................................................................................... 18

7.3 Notice of Investigation ............................................................................................. 20

7.4 Submission by Parties ............................................................................................. 21

7.5 Conferences and Ocular Inspections ....................................................................... 22

7.6 Request for Information and Technical Advice......................................................... 22

7.7 Completion of Formal Investigation ......................................................................... 23

7.8 Review of Investigation ............................................................................................ 23

7.9 Decision .................................................................................................................. 24

7.10 Remand of Cases .................................................................................................... 24

7.11 Request for Reconsideration of the PEM Board Decision ........................................ 24

7.12 Notice and Implementation of the PEM Board Decision ........................................... 25

Enforcement and Compliance Manual iii

7.14 Remedial Measures................................................................................................. 27

7.15 Costs ....................................................................................................................... 29

7.16 Service of Notices and Reports ............................................................................... 29

SECTION 8 NON-COMPLIANCE REPORT .................................................................... 31

8.1 Rationale ................................................................................................................. 31

8.2 Scope of Application ................................................................................................ 31

8.3 Non-Compliance Reports ........................................................................................ 31

8.4 Contents of Non-Compliance Reports ..................................................................... 32

8.5 Submission of Non-Compliance Reports ................................................................. 32

8.6 Action on Non-Compliance Reports......................................................................... 33

SECTION 9 WESM MEMBER INTERNAL COMPLIANCE .............................................. 34

9.1 Guiding Principles ................................................................................................... 34